As filed with the Securities and Exchange Commission on February 25, 2002
Registration No. 333-57178
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
eRESOURCE CAPITAL GROUP, INC.
--------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 23-2265039
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(State or other jurisdiction
of incorporation or organization) (IRS Employer Identification Number)
5935 CARNEGIE BLVD.
SUITE 101
CHARLOTTE, NC 28209
(704) 553-9330
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(Address and telephone number of Registrant's principal executive offices)
MICHAEL D. PRUITT
CHIEF EXECUTIVE OFFICER
eRESOURCE CAPITAL GROUP, INC.
5935 CARNEGIE BOULEVARD
SUITE 101
CHARLOTTE, NC 28209
(704) 553-9330
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(Name, address and telephone number of agent for service)
Copies of all communications, including all communications sent
to the agent for service, should be sent to:
MR. G. DAVID GORDON, ESQ.
DAVID GORDON AND ASSOC.
7633 E. 63RD PLACE
SUITE 210
TULSA, OK 74133
(918) 254-4997
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes
effective.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box. [x]
1
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If the delivery of the Prospectus is expected to be made pursuant
to Rule 434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
===================================== ===================== ====================== ====================== ====================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED SECURITY PRICE(1) REGISTRATION FEE
------------------------------------- --------------------- ---------------------- ---------------------- --------------------
------------------------------------- --------------------- ---------------------- ---------------------- --------------------
Common Stock, $.04 par value (2) 15,483,429 (3) $.935 (4) $14,477,006.09 $3,619.25 (5)
------------------------------------- --------------------- ---------------------- ---------------------- --------------------
------------------------------------- --------------------- ---------------------- ---------------------- --------------------
Common Stock, $.04 par value (2) 5,169,311 (6) $.21 (7) $ 1,085,555.31 $ 99.87
------------------------------------- --------------------- ---------------------- ---------------------- --------------------
------------------------------------- --------------------- ---------------------- ---------------------- --------------------
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended.
(2) Securities being registered for resale only.
(3) Includes 7,753,745 shares underlying warrants and options to purchase shares
of Common Stock.
(4) Based upon the average of the high and low prices of the registrant's common
stock on March 12, 2001, as reported by the American Stock Exchange.
(5) Previously paid with the initial filing of this registration statement.
(6) Includes 450,000 shares underlying warrants to purchase shares of Common
Stock.
(7) Based upon the average of the high and low prices of the registrant's common
stock on February 22, 2002, as reported by the American Stock Exchange.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
2
PROSPECTUS
SUBJECT TO COMPLETION, DATED FEBRUARY 25, 2002
The information in this Prospectus is not complete, and it may change.
This Prospectus is included in a registration statement that we filed with
the Securities and Exchange Commission ("SEC"). The selling stockholders
cannot sell these securities until that registration statement becomes
effective or unless the sale qualifies for an exemption from registration
under the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where such offer or sale is not
permitted.
eRESOURCE CAPITAL GROUP, INC.
5935 CARNEGIE BLVD.
SUITE 101
CHARLOTTE, NC 28209
704-553-9330
20,652,740 SHARES
COMMON STOCK
This Prospectus relates to the resale of up to a maximum of
20,652,740 shares of common stock, par value $.04 per share (the "Common
Stock"), which may be sold from time to time by certain stockholders (the
"Selling Stockholders") of eResource Capital Group, Inc. (the "Company" or
"we") identified in the "Selling Stockholders" section of this Prospectus
beginning on page 13. The shares that may be resold pursuant to this
Prospectus (the "Shares") include 12,448,995 shares of Common Stock owned
by the Selling Stockholders and 8,203,745 shares of Common Stock issuable
upon the exercise of warrants and options owned by the Selling Stockholders.
Our filing of the registration statement of which this Prospectus is a part
is intended to satisfy our obligations to certain of the Selling
Stockholders to register for resale the Shares issued to them and the Shares
issuable upon the exercise of the warrants or options issued to them.
We are not offering or selling any shares of our Common Stock pursuant
to this Prospectus. We will not receive any proceeds from the sale of the
Shares by the Selling Stockholders. We will, however, receive proceeds if
the Selling Stockholders pay cash to exercise some or all of the warrants or
options owned by the Selling Stockholders. We will bear the expenses of the
offering of the Shares, except that the Selling Stockholders will pay any
applicable underwriting discounts, brokerage fees or commissions and
transfer taxes, as well as fees and disbursements of their counsel and
advisors.
Our Common Stock is traded on the American Stock Exchange under the
symbol "RCG." The closing sales price of our Common Stock on February 22,
2002 was $.21 per share.
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 4 FOR INFORMATION THAT YOU SHOULD CONSIDER.
THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 25, 2002.
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3
TABLE OF CONTENTS
PAGE
Risk Factors.................................................. 4
Forward-Looking Statements.................................... 10
About the Company............................................. 10
Use of Proceeds............................................... 13
Selling Stockholders.......................................... 13
Plan of Distribution.......................................... 16
Legal Matters................................................. 17
Experts....................................................... 17
Where You Can Find More Information........................... 17
Incorporation of Certain Documents By Reference............... 17
WE HAVE NOT AUTHORIZED ANYONE (INCLUDING ANY SALESMAN OR BROKER) TO GIVE ORAL OR
WRITTEN INFORMATION ABOUT THIS OFFERING THAT IS DIFFERENT FROM THE INFORMATION
INCLUDED IN THIS PROSPECTUS OR THAT IS NOT INCLUDED IN THIS PROSPECTUS.
---------------
RISK FACTORS
You should carefully consider the risk factors set forth below, as well as
the other information in this Prospectus, in evaluating whether to purchase the
Shares.
WE MAY NEED TO RAISE ADDITIONAL FUNDS IN ORDER TO CONTINUE TO OPERATE AND
GROW OUR BUSINESS.
We believe that our existing balances of cash and cash equivalents and
investments combined with operating cash flows and expected proceeds from our
current private placement sale of Common Stock will be sufficient to meet the
working capital and capital expenditure requirements of our continuing
operations. If we are unable to grow our business or improve our operations cash
flows as expected or our current private placement sale of Common Stock does not
provide expected capital then, we will need to secure alternative debt or equity
financing to provide us with additional working capital, but there can be no
assurance that we will be able to complete such financing. If we raise funds
through debt financing, then we will incur additional interest expense going
forward. If we raise additional funds by issuing additional equity securities,
then the percentage ownership of our current stockholders will be diluted. We
cannot be certain that additional financing will be available when and to the
extent required or that, if available, it will be on acceptable terms. In
addition, our ability to complete future financings may be affected by the
market price of our Common Stock. If adequate funds are not available on
acceptable terms, then we will not be able to continue to fund our existing
businesses or our planned expansion or take other steps necessary to enhance our
business or continue our operations.
WE HAVE BEEN INCURRING OPERATING LOSSES AND THERE CAN BE NO ASSURANCE THAT
WE WILL ACHIEVE OR SUSTAIN PROFITABILITY.
We incurred operating losses in our fiscal years ended June 30, 2001 and
2000 and in the first six months of fiscal 2002. Our fiscal 2000 operating loss
included significant losses associated with our aviation businesses and in
particular losses associated with the development of our Private Seats program.
Our fiscal 2001 operating results included a significant loss from our jet
shuttle service based in Norfolk, Virginia. We have suspended our operations of
both the Private Seats and jet shuttle programs and our aviation business has
reported an operating profit for the six months ended December 31, 2001. However
on a consolidated basis we have not reported a net profit in fiscal years 2000
or 2001 and certain of our operating businesses have incurred and continue to
incur operating losses. In particular, we have incurred significant operating
losses in connection with our efforts to grow the business of LST, Inc. d/b/a
LifeStyle Technologies ("LST"), a company acquired by us in March 2001. We
expect to continue to incur operating costs in connection with our efforts to
expand our existing businesses and to grow through acquisitions. As a result of
these costs and uncertain revenue growth, there can be no assurance that we will
achieve or sustain profitability.
4
THE PRICE OF OUR COMMON STOCK HAS BEEN VOLATILE.
The stock market in general, and the market for technology and
Internet-related companies in particular, has recently experienced extreme
volatility. Similarly, the per share trading price of our Common Stock during
the year ended June 30, 2001, as reported by the American Stock Exchange,
fluctuated from a high of $2.00 to a low of $0.25, and from June 30, 2001 to
January 31, 2002, the per share closing price of our Common Stock fluctuated
from a low of $0.18 to a high of $0.90. Fluctuations in the price of our Common
Stock may occur, among other reasons, in response to:
o operating results;
o regulatory changes;
o economic changes;
o market valuation of firms in related businesses; and
o general market conditions.
In addition, the volume of shares of our Common Stock bought and sold on any
trading day has been subject to wide fluctuations which also contribute to
fluctuations in the trading price of our Common Stock.
The trading price of our Common Stock could continue to be subject to wide
fluctuations in response to these or other factors, many of which are beyond our
control. If the market price of our Common Stock decreases, stockholders may not
be able to sell their shares of Common Stock at a profit.
CERTAIN OF OUR BUSINESSES HAVE LIMITED OPERATING HISTORIES.
We acquired DM Marketing, Inc. ("DMM"), Internet Aviation Services, Ltd.
("IASL"), Avenel Ventures, Inc. ("Avenel Ventures") and LST during the fiscal
year ended June 30, 2001. DMM was formed in October 1998 and IASL, Avenel
Ventures and LST were each formed during calendar year 2000. Each of these
companies has incurred losses since its inception and has a limited operating
history. As a result, there is limited information upon which to base an
evaluation of these components of our business and their prospects. You should
evaluate the chances of financial and operating success of these businesses in
view of the risks, uncertainties, expenses, delays and difficulties associated
with starting new businesses.
WE HAVE BEEN UNSUCCESSFUL IN IMPLEMENTING OUR PRIOR BUSINESS PLANS, HAVE
RECENTLY MODIFIED OUR BUSINESS PLAN AND MAY NOT BE ABLE TO SUCCESSFULLY
IMPLEMENT OUR CURRENT BUSINESS PLAN.
During our fiscal year ended June 30, 2000, we incurred substantial expenses
developing our Private Seats program. We were unable to generate sufficient
customer use of our Private Seats program and had to discontinue the service
shortly after it was launched. As a result, we made a decision to diversify
through the acquisitions of DMM, IASL, Avenel Ventures, LST and Logisoft
Computer Products Corp. ("Logisoft"). In addition, we expanded our business plan
to attempt to acquire expansion-stage technology companies. At the same time, we
have had a change in our executive team. However, we have limited resources and
there can be no assurance that we will be able to implement our expanded
business plan or achieve profitability. In addition, while we have no intention
to change our business strategy in the future, if we are not successful in
implementing our new strategy or if we otherwise believe it to be in our best
interest, then we may modify or change our business plans.
WE MAY BE UNABLE TO SUCCESSFULLY EXECUTE OUR ACQUISITION STRATEGY.
We anticipate that a portion of our future growth will be accomplished
through acquisitions. The success of this plan depends upon our ability to:
o identify suitable acquisition opportunities;
o effectively integrate acquired personnel, operations, products and
technologies into our organization;
o retain and motivate the personnel of acquired businesses;
o retain customers of acquired businesses; and
o obtain necessary financing on acceptable terms or use Common Stock as
consideration for acquisitions.
Additionally, in pursuing acquisition opportunities, we may compete with
other companies with similar growth strategies, many of which are larger than we
5
are and have greater financial and other resources than we do. Competition for
acquisition targets could also result in increased prices for acquisition
targets. In addition, turbulence in financial markets and the slowdown in the
U.S. economy may result in a diminished pool of companies that meet our criteria
for acquisition.
OUR ACQUISITION STRATEGY HAS AND WILL CONTINUE TO DILUTE OUR CURRENT
STOCKHOLDERS' OWNERSHIP.
We have issued a total of 31,471,065 shares in connection with the
acquisitions of IASL, DMM, Avenel Ventures, LST, Logisoft and a home technology
business that we acquired in July 2001. Our acquisition strategy contemplates
that we will continue to issue shares of our Common Stock to make strategic
acquisitions and attempt to grow our business. However, each of the acquisitions
that we complete in the future will further dilute our current stockholders'
ownership interest in the Company.
EVENTS OF SEPTEMBER 11, 2001 MAY HAVE AN ADVERSE EFFECT ON OUR BUSINESSES.
The terrorist attack against the United States has produced great
uncertainty in the economy in general and in the aviation industry in
particular. Industry reports indicate that these events have had a substantial
negative impact on the demand for air travel generally. These events may
drastically alter the long-term demand for charter services. In addition, these
events may lead the Federal Aviation Administration to place additional
restrictions on charter flight operators, which may increase the cost of private
charter services. The long-term impact of these events on the aviation industry
and the chartered services segment of that industry are not known. These events
could have a material adverse effect on our aviation travel services business
including our operation of a new charter hub service through Orlando, Florida.
Also, the terrorist attack against the United States has produced
uncertainty in the financial markets, which could prolong the current economic
recession. The long-term impact of these events on the United States economy is
unknown. These events could have a material adverse effect on our home
technology business and our other business segments.
WE FACE SIGNIFICANT COMPETITION.
Our success depends on our ability to grow our businesses, all of which
operate in highly competitive business segments. Many of our competitors have
substantially greater financial, operational and human resources than we do. As
a result, we may be unable to compete successfully with such competitors.
WE FACE COMPETITION FROM OTHER ACQUIRORS OF, AND INVESTORS IN,
INTERNET-RELATED VENTURES WHICH MAY PREVENT US FROM REALIZING STRATEGIC
OPPORTUNITIES.
We plan to acquire or invest in existing companies that we believe are
complementary to our existing operations and fulfill our business plan. In
pursuing these opportunities, we face competition from other capital providers
and operators of Internet-related companies, including publicly-traded Internet
companies, venture capital companies and large corporations. Some of these
competitors have greater financial, operational and human resources than we do.
This competition may limit our opportunity to acquire interests in companies
that we believe could help us fulfill our business plan and increase our value.
OUR GROWTH PLACES STRAIN ON OUR MANAGERIAL, OPERATIONAL AND FINANCIAL
RESOURCES.
Our growth has placed, and is expected to continue to place, a significant
strain on our managerial, operational and financial resources. Further growth
will increase this strain on our managerial, operational and financial
resources, inhibiting our ability to successfully implement our business plan.
WE DEPEND ON CERTAIN IMPORTANT EMPLOYEES, AND THE LOSS OF ANY OF THOSE
EMPLOYEES MAY HARM OUR BUSINESS.
Our performance is substantially dependent on the performance of our
executive officers and other key employees. The familiarity of these key
employees with the technology and Internet industry and the familiarity of the
key employees of our charter aviation business with the leisure charter services
business makes them especially critical to our success. In addition, our success
is dependent on our ability to attract, train, retain and motivate high quality
personnel, especially for our management team. The loss of the services of any
of our executive officers or key employees may harm our business. Our success
also depends on our continuing ability to attract, train, retain and motivate
other highly qualified technical and managerial personnel. Competition for such
personnel is intense and our limited resources are likely to make it more
difficult for us to attract and retain such personnel.
6
WE HAVE BEEN UNABLE TO CONSISTENTLY GENERATE SERVICE CONTRACTS FOR OUR CALL
CENTER AND, AS A RESULT, OUR CALL CENTER MAY NOT ACHIEVE OR SUSTAIN
PROFITABILITY.
We have a 35 seat customer service representative call center that is
currently under utilized. In order to effectively utilize our call center, we
are dependent upon securing service contracts. To date, we have not been able to
secure sufficient service contracts to utilize our call center on a regular
basis. Although we continue to pursue additional contracts to utilize our
customer service representative capacity, there is no guarantee that we will
obtain adequate contracts to utilize the seats. Failure to fill a substantial
portion of these seats on a regular basis would result in our call center
continuing to operate at a loss.
OUR HOME TECHNOLOGY BUSINESS MAY NOT ACHIEVE OR SUSTAIN PROFITABILITY.
Our home technology business began operations on March 24, 2000 and since
then has not achieved profitability for a sustained period of time. Through our
home technology business, we provide homeowners complete installation and
equipment for structured wiring, home security, PC networking, home audio, home
theater, central vacuum and accent lighting. We also provide similar services to
the commercial market. Our planned expansion of this business may fail due to
intense competition from competitors in the residential technology industry who
have greater capital, technical, operational, marketing and human resources and
greater experience and brand equity than we do. Furthermore, we may have
overestimated the depth of the residential technology industry and the demand
for our home technology products. Our inability to execute the expansion plan of
our home technology business and to attract and retain customers for this
business would likely result in our home technology business continuing to
operate at a loss.
OUR EFFORTS TO GROW OUR HOME TECHNOLOGY BUSINESS THROUGH THE SALE OF
FRANCHISES MAY NOT SUCCEED.
We began franchising our home technology business in September 2001. There
is no guarantee that efforts to franchise our home technology business model
will be successful. To the extent we are successful in selling franchises, then
we may incur significant costs related to supervising and monitoring our
franchisees and protecting our proprietary rights associated with our business
model. Furthermore, franchise operations are regulated by the federal and state
governments and compliance with such regulations may cause us to incur
additional costs. We cannot be certain that we will generate adequate revenue
from our franchise activities to offset these costs.
OUR INTERNET/TECHNOLOGY SOLUTIONS BUSINESS GENERALLY DOES NOT HAVE
LONG-TERM CONTRACTS.
The clients of our Internet/Technology solutions business are generally
retained on project-by-project basis, rather than pursuant to long-term
contracts. As a result, a client may or may not engage us for further services
once a project is completed or may unilaterally reduce the scope of, or
terminate, existing projects. The absence of long-term contracts creates an
uncertain revenue stream, which could negatively affect the financial condition
of our Internet/Technology solutions business.
THE DEVELOPING MARKET FOR STRATEGIC INTERNET SERVICES AND THE LEVEL OF
ACCEPTANCE OF THE INTERNET AS A BUSINESS MEDIUM WILL AFFECT OUR
INTERNET/TECHNOLOGY SOLUTIONS BUSINESS.
The market for strategic Internet services is relatively new and is evolving
rapidly. The future growth of our Internet/Technology solutions business is
dependent upon the ability of such business to provide strategic Internet
services that are accepted by existing and future clients. Demand and market
acceptance for recently introduced services are subject to a high level of
uncertainty. The level of demand and acceptance of strategic Internet services
is dependent upon a number of factors, including:
o the growth in consumer access to and acceptance of new interactive
technologies such as the Internet;
o companies adopting Internet-based business models;
o the development of technologies that facilitate two-way communication
between companies and targeted audiences;
o the level of capital spending on Internet, technology and communications
initiatives; and o the extent and nature of any domestic or international
regulation of e-business or uses of the Internet.
Significant issues concerning the commercial use of these technologies
include security, reliability, cost, ease of use and quality of service. These
issues remain unresolved and may inhibit the growth of Internet business
solutions that utilize these technologies.
7
Industry analysts and others may have made many predictions concerning the
growth of the Internet as a business medium. You should not rely upon these
predictions. Recently, the market for strategic Internet services in particular
has contracted. If the market for strategic Internet services fails to develop,
or develops more slowly than expected, or if the services provided by our
Internet/Technology solutions business do not achieve market acceptance, then
revenue and operating results of such business may be volatile and our
Internet/Technology solutions business may be unable to achieve or sustain
operating profits.
OUR INTERNET/TECHNOLOGY SOLUTIONS BUSINESS MAY NOT BE ABLE TO KEEP UP WITH
THE CONTINUOUS TECHNOLOGICAL CHANGE IN ITS MARKET.
The success of our Internet/Technology solutions business will depend, in
part, on its ability to respond to technological advances. This business may not
be successful in responding quickly, cost-effectively and sufficiently to these
developments. Many of the competitors of our Internet/Technology solutions
business are larger than we are and have significantly more financial resources
to invest in advances in technology, products, engagement methodology and other
areas central to providing technology and Internet solutions. Our
Internet/Technology solutions business will not be able to compete effectively
if it is unable, for technical, financial or other reasons, to adapt in a timely
manner in response to technological advances. In addition, employee time
allocated to responding to technological advances will not be available for
client engagements.
THE SUCCESS OF OUR INTERNET/TECHNOLOGY SOLUTIONS BUSINESS IS LARGELY
DEPENDENT UPON ITS ABILITY TO RETAIN ITS MANUFACTURER AUTHORIZATIONS THAT ALLOW
IT TO SELL SOFTWARE TO EDUCATIONAL FACILITIES AT DISCOUNTED PRICING.
Our Internet/Technology solutions business has been accumulating
authorizations from key software manufacturers that allow it to sell products to
educational facilities at deep discounts. If our Internet/Technology solutions
business were to lose any of these authorizations, its ability to sell computer
products to educational customers could be adversely impacted, which could have
a similar impact on its sales, profitability and ability to expand within this
business line. In addition, this business uses credit lines extended by software
and hardware manufacturers and distributors. The loss of any of these credit
lines would limit the ability of our Internet/Technology solutions business to
meet customer demand, thereby reducing sales and profits.
IF OUR AVIATION TRAVEL SERVICES BUSINESS DOES NOT PRODUCE REVENUES AS
FORECASTED, THEN WE WILL NEED TO RAISE ADDITIONAL CAPITAL SOONER THAN EXPECTED.
We have entered into an agreement effective November 2001 with a major tour
operator to create a passenger hub at the Orlando-Sanford International Airport.
Pursuant to the terms of this agreement, six charter aircraft originate in
eastern and midwestern cities and serve five Caribbean destinations and Orlando,
Florida. We currently forecast increased revenues in our aviation travel
services business as a result of this agreement. We expect that these increased
revenues will enable our aviation travel services business to maintain
profitability and will assist us in covering some operating losses in our other
business segments and corporate expenses. Due to the slowdown and uncertainty in
the economy in general and in the air travel industry in particular, there can
be no guarantee that the forecasted revenues from this agreement and our
aviation travel services business may materialize. If our aviation travel
services business does not generate the forecasted revenues, then our aviation
travel services business will not maintain profitability and we will not be able
to offset any operating losses in other business segments or corporate expenses.
As a result, we will need to raise additional capital, through debt or equity
financing, sooner than expected.
GOVERNMENT REGULATION OF THE TRAVEL INDUSTRY COULD IMPACT OUR AVIATION
TRAVEL SERVICES BUSINESS' OPERATIONS.
Certain segments of the travel industry are regulated by the United States
Government and, while we are not currently required to be certified or licensed
under such regulation, certain services offered by our aviation travel services
business are affected by such regulation. Charter flights operators, upon which
our aviation travel services business depends, are subject to vigorous and
continuous certification requirements by the Federal Aviation Administration.
Changes in the regulatory framework for charter aviation travel could adversely
affect our aviation travel services business' operations and financial
condition.
OUR AVIATION TRAVEL SERVICES BUSINESS FACES INTENSE COMPETITION FOR
CUSTOMERS FROM THE TRAVEL INDUSTRY.
We provide leisure charter jet travel and face intense competition from
commercial airlines for the potential customers who travel to these locations
and other locations that we may serve in the future. These commercial airlines
8
have greater resources, marketing efforts and brand equity than we do and they
also offer a potential customer more flights to these locations. Furthermore,
travelers have numerous choices of location when choosing travel destinations.
Since we offer only limited travel destinations, we face intense competition
from travel agents, commercial airlines, hotels, resorts, casinos and other
organizations in the travel industry that offer alternative travel destinations
to those offered by us. Such competitors possess far greater capital and human
resources, marketing efforts and brand equity than we do. If we are unable to
compete effectively with these various competitors in the travel industry, we
may not be able to maintain profitability.
THE EXERCISE OF OUTSTANDING OPTIONS AND WARRANTS COULD SUBSTANTIALLY DILUTE
EXISTING STOCKHOLDERS AND COULD HAVE A NEGATIVE EFFECT OUR STOCK PRICE.
We have adopted the eResource Capital Group, Inc. Stock Compensation Plan
(the "Plan") and our stockholders have authorized the issuance of options to
acquire up to 20,000,000 shares of Common Stock under the Plan. Currently, we
have outstanding options for 9,325,698 shares under the Plan that have been
granted to our officers, directors, employees and other service providers of
which options for 7,361,159 shares are vested. Options for 2,160,000 shares of
Common Stock that were issued under the Plan were exercised in fiscal year 2001.
In addition to options issued under the Plan, we currently have outstanding
options and warrants for up to 17,170,120 shares. The shares underlying
8,203,745 of these non-Plan warrants and options are being registered pursuant
to this Prospectus. Our outstanding options and warrants have exercise prices
ranging from $.04 to $4.00. The exercise of these options or warrants will
dilute the percentage ownership of our current stockholders and the potential
sale of shares issued upon the exercise of these warrants or options could have
a negative impact on the market price of our Common Stock.
IF THE SELLING STOCKHOLDERS SELL A SUBSTANTIAL AMOUNT OF THEIR SHARES, THESE
SALES COULD HAVE AN ADVERSE IMPACT ON OUR STOCK PRICE.
There are several stockholders who own significant blocks of our Common
Stock, some of whom are registering the possible sale of their shares under this
Prospectus. If some or all of these significant stockholders sold a substantial
amount of our Common Stock as allowed under the Securities Act, such sales could
have a significant negative impact on the market price of our Common Stock. This
Prospectus could result in a large number of shares of our Common Stock being
sold in the market which, in turn, could result in a reduction in the market
price of our Common Stock.
THE FUTURE SALES OF RESTRICTED SECURITIES COULD HAVE A NEGATIVE EFFECT ON
OUR STOCK PRICE.
The market price of our Common Stock could be negatively affected by the
future sale of shares of restricted Common Stock, including shares of restricted
Common Stock underlying options and warrants that have been issued by us.
Approximately 44,000,000 issued and outstanding shares of our Common Stock are
believed to be restricted securities as defined in Rule 144 promulgated under
the Securities Act. Rule 144 provides generally that restricted securities must
be held for a one year period prior to resale and provides certain additional
limitations on the sale of such shares, including limitations on the volume of
such shares that a beneficial owner may sell in any three month period
thereafter. Generally, non-affiliated stockholders may sell restricted shares
that have been held for at least two years without any limitations. In addition,
Rule 145 permits the sale by non-affiliates of restricted securities issued in
connection with certain business combinations one year after such shares are
issued. As restricted shares become eligible for resale pursuant to Rule 144 or
Rule 145, the number of sellers of our Common Stock could increase significantly
and, as a result, the market price of our Common Stock could decrease.
INABILITY TO PROTECT INTELLECTUAL PROPERTY RIGHTS.
We rely primarily on a combination of intellectual property laws and
contractual provisions to protect our proprietary rights and technology, brand
and marks. These laws and contractual provisions provide only limited protection
of proprietary rights and technology. If we are not able to protect our
intellectual property, proprietary rights and technology, we could lose those
rights and incur substantial costs policing and defending those rights. Our
means of protecting our intellectual property, proprietary rights and technology
may not be adequate.
WE DO NOT INTEND TO PAY DIVIDENDS.
We have never declared or paid any cash dividends on our Common Stock. We
currently intend to retain any future earnings for funding growth and,
therefore, do not expect to pay any dividends in the foreseeable future.
9
RECENT DEVELOPMENTS
In November 2001, our previously reported $4,000,000 loan commitment was
cancelled and we did not receive any funding in connection with that commitment.
In December 2001 we received an $800,000 term loan from an independent
third party. The loan is repayable in two annual installments, $200,000 due in
12 months and $600,000 in 24 months. The loan bears interest at 12% per annum,
payable monthly, and is secured by certain assets of our aviation business
subsidiary. In connection with the loan, we issued 500,000 shares of our Common
Stock with a then market value of $100,000 as a broker's fee and issued the
lender warrants to purchase 300,000 shares of our Common Stock after 12 months
at an exchange price of the lesser of $0.30 per share or a mutually agreed upon
discounted market price.
In December 2001, our Board of Directors approved a private placement of up to
10,000,000 shares of our Common Stock at a price of $0.10 per share. We are
managing the private placement directly and, as a result, will not incur any
investment banking fees. We sold 2,500,000 shares under the private placement in
December 2001, 4,930,000 shares in January and February 2002, and expect to
complete the sale of the remaining 2,570,000 shares on or before March 31, 2002.
FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT MAY PROVE NOT TO BE
ACCURATE. This Prospectus (including information included or incorporated by
reference herein) contains certain "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which represent our
expectations or beliefs concerning future events that involve risks and
uncertainties. All statements other than statements of historical facts included
in this Prospectus (including, without limitation, the statements under the
section of this document titled "About the Company" and elsewhere herein) and in
our filings that are incorporated by reference herein are forward-looking
statements. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no assurance that such
expectations will prove to be correct. Such forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
future results or trends to differ materially from future results or trends
expressed or implied by such forward-looking statements. The most significant of
such risks, uncertainties and other factors are discussed under the section of
this document titled "Risk Factors," beginning on page 4 of this Prospectus.
Prospective investors are urged to consider carefully such factors.
ABOUT THE COMPANY
WHO WE ARE
We are a Delaware corporation engaged in the operation of:
o an aviation travel services business;
o a telecommunications call center business;
o a home technology business; and
o an Internet/Technology solutions business.
10
Our current operating subsidiaries include: flightserv.com, Inc. (our
aviation travel services business); DM Marketing, Inc. (our telecommunications
call center business); Avenel Ventures, Inc. and its subsidiary, Avenel
Alliance, Inc. (Ventures is a part of our Corporate unit and Alliance is part of
our Internet/technology business); LST, Inc. (our home technology business); and
Logisoft Computer Products, Corp. (part of our Internet/Technology solutions
business). During the first half of fiscal year 2001, we modified and expanded
our business plan to target the acquisition of expansion-stage companies in five
technology industry segments: e-commerce, Internet infrastructure, technology
professional services, enabling technology and data communication systems. These
industry segments may be defined as follows: (i) companies in the e-commerce
segment use the Internet as a sales channel to drive profitability and growth,
(ii) companies in the Internet infrastructure segment sell equipment
infrastructure on which the Internet or Internet-provider based networks are
delivered or accessed, (iii) companies in the technology professional services
segment provide marketing, financial and other consulting services related to
technology companies, (iv) companies in the enabling technology industry segment
improve performance or delivery of Internet or network based services, and (v)
companies in the data communications systems segment use the Internet, wireless
or network technology to provide a data or communication network. We are in the
early phases of our expanded strategy and continue to focus on existing
operations as well as our efforts to implement this strategy.
OUR BUSINESSES
Aviation Travel Services Business
In fiscal 1999 and 2000, we developed an Internet Web site to provide access
to private jet flight and travel services. The Web site was launched on March 9,
2000 and featured our Private Seats program which was designed to aggregate
individual demand for private jet travel between designated cities to make
chartering of an aircraft economical for the charter operator and individual
travelers. From April 17, 2000 through June 30, 2000, we chartered a limited
number of flights. Thereafter, we did not generate any revenue from the Private
Seats program. We currently have no plans to further develop and market the
Private Seats program.
We acquired IASL in August 2000. IASL was a new leisure and business travel
services company which provided charter aviation services. We now operate our
charter aviation services as part of our aviation travel services business
through our subsidiary flightserv.com, Inc. ("FSW"). FSW does not own or operate
any aircraft. From October 2000 through December 2001, FSW provided charter
aircraft services to Cancun, Mexico and Tunica, Mississippi.
In July 2001, FSW entered into an agreement, effective December 2001, with
Vacation Express to create a passenger hub at the Orlando-Sanford International
Airport. Pursuant to the terms of the agreement, six commercial jet aircraft
will originate in six eastern and midwestern cities and serve five Caribbean
destinations and Orlando, Florida. At December 31, 2001, FSW operated four
aircraft under this contract and expects to have the remaining aircraft in
operation by March 31, 2002.
During the three month period ended December 31, 2001, sales to Aviation
Network Services and Vacation Express, customers of the Company's Aviation
Travel Services business, represented 20% and 39%, respectively, of the
Company's consolidated revenue. For the six month period then ended, sales to
these customers represented 21% and 40%, respectively, of the Company's
consolidated revenue.
Telecommunications Call Center Business
We operate our telecommunications call center business through our
subsidiary DMM. DMM operates a thirty-five (35) seat telecommunications call
center located in Pensacola, Florida which is equipped to provide telemarketing,
help desk and other services to Internet-related and other companies. In fiscal
2001, the Company determined that it would not develop its Private Seats program
and, accordingly, that DMM would not be utilized to provide customer service for
the Private Seats program. As a result, DMM's business is dependent upon
securing service contracts with third parties. To date, DMM has been unable to
secure sufficient contracts to utilize its call center in a consistent and
profitable manner and currently none of the seats in the call center are being
utilized.
Home Technology Business
We operate our home technology business through our subsidiary LST. LST is a
full service home technology integration company providing complete installation
and equipment for structured wiring, home security, PC networking, home audio,
home theater, central vacuum and accent lighting. During fiscal 2001, LST
expanded from its headquarters in Charlotte, North Carolina to Raleigh, North
11
Carolina; Greenville, South Carolina; Columbia, South Carolina; Hilton Head,
South Carolina and Charleston, South Carolina. LST creates relationships with
high-end residential homebuilders (those that build residences with value equal
to or greater than $250,000) and provides such homebuilders with a basic
structured wiring and security package in exchange for an agreement to introduce
the homeowner to an LST sales consultant and to offer the homeowner a visit to
the local LST showroom. While in the showroom, the homeowner is introduced to
the complete line of home security, entertainment, lighting, and home office
options. Using LST pricing software, the sales consultant can customize, design
and price the homeowner's package while the customers are enjoying their
"showroom experience," a significant advantage within the industry. LST has also
secured relationships with product manufacturers, distributors and service
providers (cable, Internet service provider, broadband and security) to ensure
the highest quality and most attractive pricing for the homeowners' needs. The
"up sales" for these products and services usually range from $2,000 to $10,000.
LST, however, has installed packages up to $100,000.
In the fourth quarter of fiscal 2001, LST began development of a national
franchising program, which was implemented in September 2001. In connection with
the franchising program, LST sold its Raleigh, NC, Hilton Head, SC, Greenville,
SC and Columbia, SC locations to franchisees and has reached agreements with
franchisees for the sales of an additional 7 markets. Also, in July 2001, LST
acquired a home technology business located in Atlanta, Georgia.
INTERNET/TECHNOLOGY SOLUTIONS BUSINESS
Our Internet/Technology Solutions business is the result of our acquisitions
of Avenel Alliance, Inc. ("Avenel Alliance") in February 2001 and Logisoft, and
its wholly-owned subsidiary eStorefrons.net Corp. in June 2001. Avenel Alliance
was a wholly-owned subsidiary of Avenel Ventures, which was also acquired by us
in February 2001 and integrated into our corporate unit.
Our Internet/Technology Solutions segment provides integrated products and
services to assist customers in meeting their strategic technology and
telecommunications initiatives. Our products and services include software
distribution to corporate and educational customers, data networking can
communications inftrastructure consulting and implementation, full service
Internet development, Internet site hosting and co-location and Internet
business development services encompassing partner site management and
marketing. In our Internet business development and marketing services, we
generally participate in the development and implementation of the business plan
in exchange for revenue-sharing and/or equity-based arrangements.
COMMERCIAL AND RESIDENTIAL REAL ESTATE OPERATIONS
We discontinued our residential real estate development business in fiscal
1999. During fiscal 1999 and 2000, we disposed of the majority of our
residential real estate holdings and in fiscal 2001 completed the liquidation of
our residential real estate.
In fiscal 2001, we discontinued our commercial real estate business, which
consisted of two commercial shopping centers in the Atlanta, Georgia area. In
August, 2001, we completed the sale of the shopping centers.
OUR CORPORATE HISTORY
Prior to fiscal 1996, we operated a drug-screening and testing lab and a
computer software development business. At that time our name was Proactive
Technologies, Inc. In fiscal 1996, we discontinued these operations when we
acquired Capital First Holdings, Inc., a residential real estate development
company. Through the first half of fiscal 1999, we were engaged primarily in the
design, development and sale of single-family subdivisions.
In the second half of fiscal 1999, we also acquired commercial real estate
businesses consisting of two strip-mall shopping centers and a hotel development
concept. Also during the second half of fiscal 1999, we decided to discontinue
our residential real estate development operations and focus primarily on
developing an Internet Web site to provide access to private aviation travel
services. We changed our name to flightserv.com in June 1999 to reflect the new
business direction.
In fiscal 1999 and 2000, we continued the development of the private
aviation concept and developed the Private Seats program to provide Internet
access to private jet flight and related services. The Private Seats program was
designed to sell, directly to the public, tickets for air travel out of
alternative airports on corporate jets between designated city pairs. We
launched the Private Seats program in March 2000, but were not able to generate
customer bookings, had very minimal revenue and did not book any flights after
June 2000. We do not expect to utilize the Private Seats program in the future
but, through FSW, may evaluate alternate private charter services.
In fiscal 2001, we modified our business plan and acquired several companies
in various business segments, including IASL in August 2000, DMM in September
2000, Avenel Ventures in February 2001, LST in April 2001, Logisoft in June 2001
and another home technology business in July 2001. In October 2000, as part of
our expanded business plan, we changed our name to eResource Capital Group, Inc.
Also in fiscal 2001, we discontinued our commercial real estate business.
12
OUR ADDRESS AND PHONE NUMBER
Our principal executive offices are located at 5935 Carnegie Blvd., Suite
101, Charlotte, North Carolina 28209. Our telephone number is (704) 553-9330.
USE OF PROCEEDS
All of the Shares of our Common Stock offered hereby are being sold by the
Selling Stockholders. We will not receive any of the proceeds from the sale of
the Shares. We will receive proceeds if the warrants and options issued to the
Selling Stockholders are exercised for cash. However, we do not control the
exercise of the warrants or options and do not know whether any or all of the
warrants or options will be exercised. In addition, certain of the warrants
issued to the Selling Stockholders provide the Selling Stockholders with the
right to exercise the warrants in cashless transactions. To the extent such
warrants are exercised through cashless transactions, we will not receive any
additional proceeds at the time such warrants are exercised. We intend to use
the proceeds we receive, if any, upon exercise of the warrants or options, for
general corporate purposes.
SELLING STOCKHOLDERS
The table below identifies each Selling Stockholder and sets forth
information, to the best of our knowledge, regarding each Selling Stockholders'
beneficial ownership of shares of our Common Stock. This information is based
upon information provided by each respective Selling Stockholder and public
accounts filed with the SEC.
The Shares offered by this Prospectus may be offered for sale from time to
time by the Selling Stockholders. Because the Selling Stockholders may offer
all, some or none of the Shares pursuant to this Prospectus, and because there
are currently no agreements, arrangements or understandings with respect to the
sale of any Shares, no estimate can be given as to the number of shares of
Common Stock that will be held by the Selling Stockholders after the completion
of this offering, unless it is assumed that all the Shares offered pursuant to
this Prospectus are sold. Except as indicated below, none of the Selling
Stockholders has had a material relationship with us within the past three years
other than as a result of the ownership of the Shares or other of our
securities.
The number of shares of Common Stock beneficially owned by the Selling
Stockholders includes the shares of Common Stock beneficially owned by the
Selling Stockholders as of the date of this Prospectus and shares of Common
Stock underlying warrants or options held by Selling Stockholders that are
exercisable within sixty (60) days of February 22, 2002. Except as otherwise
indicated, to our knowledge, the Selling Stockholders have sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by them, or with respect to the shares underlying options or warrants, will have
sole voting and investment power at the time such shares are sold. The
percentages shown in the table below are based upon 85,055,717 shares of Common
Stock outstanding as of February 22, 2002. The numbers shown in the column
"Number of Shares That May be Offered Pursuant to this Prospectus" include both
shares of Common Stock currently outstanding and shares of Common Stock that may
be issued to certain of the Selling Stockholders upon exercise of any warrants
or options held by them.
PERCENT OF
OUTSTANDING
SHARES TO BE
BENEFICIALLY
OWNED IF ALL
SHARES WHICH MAY
NUMBER OF SHARES NUMBER OF SHARES BE OFFERED
NUMBER OF SHARES THAT MAY BE BENEFICIALLY PURSUANT TO THIS
BENEFICIALLY OWNED OFFERED PURSUANT OWNED AFTER PROSPECTUS ARE
SELLING STOCKHOLDERS BEFORE OFFERING (1) TO THIS PROSPECTUS OFFERING (1) SOLD (1)
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Acqua Wellington Value Fund, Ltd. 1,630,077(2) 1,630,077(2) 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Adams, Nancy N. 52,000 52,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Adams, T.V. 13,000 13,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Anderson, David 120,169 120,169 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Bailey, M. 2,813 2,813 0 0
----------------------------------------------------------------------------------------------------------------------------
13
----------------------------------------------------------------------------------------------------------------------------
Ballard, R. 401,074 226,852 174,222 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Barrett, G. 1,925,000 900,000 1,025,000 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Bert Lance Grantor Trust 400,000(3) 400,000(3) 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Booker, Robert 57,500 32,500 25,000 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Brandon Holdings 2,185,000 2,185,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Catizone, Carmine & Pat 100,000 100,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Catizone, Pat & Barbara 100,000 100,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
CCRI 12,000 12,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Clark, R. 2,037,250(4) 400,000 1,637,250 1.9%
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Claulice, Despina M. 8,000 8,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Coleman, Mace 99,613 99,613 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Cresenzo, D. 169,000 5,000 164,000 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Davenport, Mary 33,556 33,556 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
DC Investment Partners Exchange
Fund, L.P. 123,802(5) 123,802(5) 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Dunlap, W. Ray 46,200 26,000 20,200 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Eckhart, Catherine F. 13,000 13,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Fairwinds 7,500 7,500 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Four Corners Capital, LLC(6) 3,849,842(7) 3,849,842(7) 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Fox, S. 386,500 218,250 168,250 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Franchising Concepts, LLC 50,000(8) 50,000(8) 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Fusion Partners, LLC 260,000 260,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Galland, Kharasch, Greenberg,
Fellman & Swirsky, P.C. 400,000(9) 400,000(9) 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Gold, Robert M. 300,000 300,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Gordon, George 140,000 140,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Greater Atlanta Alarm Services, Inc. 975,556 487,778 487,778 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Herold, Glenn F. 12,000 12,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Hill, J. 650,000 600,000 50,000 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Hjelle, Eirik 41,333 41,333 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Horne, Wayne R. 25,000(10) 25,000(10) 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Inman, Robert 45,500 45,500 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
International Internet, Inc. 600,000 100,000 500,000 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Jeffries, P. 32,500 32,500 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Krodel, Glenn 19,500 19,500 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Lamy, R. 1,858,958 1,029,188 829,770 1.0%
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Lamy, W. 1,247,958 687,938 560,020 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Lazard, Freres & Co., LLC 2,000,000(11) 2,000,000(11) 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Loconte, Michael 13,000 13,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Markham Holdings 15,000 15,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Morris, W.L. 670,000 670,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Mosack, C. 50,000 50,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Peterson, Joseph G. 5,400 5,400 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Pittsford Capital, LLC 12,000 12,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Pope, Thomas D. 30,000 30,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Prone, Nico P. 25,000(10) 25,000(10) 0 0
14
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Raven Consulting Group, Inc. 331,338 331,338 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Robb, W. 112,500 112,500 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Sanibell 1,300,000 1,300,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
R Siefert 50,000 50,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Smith Gambrell and Russell, LLP(12) 100.000 100,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Smith, Marianne 66,666 66,666 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Sorenson, J. 12,500 12,500 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Stoneleigh Corp. 462,500 325,000 137,500 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Torreon Holdings, Inc. 25,000 12,500 12,500 *
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Turner, Terry 300,000 300,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Tusty, J. 5,625 5,625 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Van Ernst, Jakobs 75,000 75,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
White, D. 112,500 112,500 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Wilkerson, D. 84,000 84,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Williamson, Worth 65,000 65,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Wirth, Peter J. 65,000 65,000 0 0
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Wussler, Robert 66,666 25,000 41,666 *
----------------------------------------------------------------------------------------------------------------------------
* Indicates less than 1% beneficial ownership of the outstanding shares of
Common Stock.
(1) Beneficial ownership has been determined in accordance with Rule 13d-3 under
the Exchange Act.
(2) Includes shares underlying a warrant to purchase 1,630,077 shares of Common
Stock.
(3) Represents shares underlying a warrant to purchase 400,000 shares of
Common Stock issued in connection with consulting services rendered to
us by Mr. Bert Lance.
(4) Includes 800,000 shares received upon exercise of an option issued in
connection with investment services rendered to us by Mr. Clark.
(5) Represents shares underlying a warrant to purchase 123,802 shares of
Common Stock.
(6) Mr. Goldberg, a member of Four Corners Capital, LLC, was a director of the
Company from February 10, 1999 through December 2, 1999.
(7) Includes shares underlying a warrant and option to purchase 3,599,866
shares of Common Stock. Four Corners Capital, LLC provided investment
banking services to us and in return received 200,000 shares of Common
Stock and options to purchase 1,000,000 shares of Common Stock in
connection with such services.
(8) Represents shares issued in connection with consulting services
provided to us by David Deutsch, a Managing Partner of Franchising
Concepts, LLC. Mr. Deutsch assigned the right to receive such shares
to Franchising Concepts, LLC in June 2001.
(9) Represents shares underlying warrants to purchase 400,000 shares of Common
Stock which were issued in connection with certain legal services provided
to us.
(10) Represents shares underlying a warrant issued to Noble International
Investments, Inc. in connection with consulting services provided to us.
Nobel International Investments, Inc. assigned such warrant to Messrs.
Horne and Prone in October, 2001.
15
(11) Represents shares underlying a warrant to purchase 2,000,000 shares of
Common Stock issued in connection with an agreement to provide investment
banking and consulting services to us.
(12) Represent shares issued in connection with certain legal services provided
to us.
PLAN OF DISTRIBUTION
All or part of the Shares may be offered by the Selling Stockholders from
time to time in transactions on the American Stock Exchange, in privately
negotiated transactions, through the writing of options on the Shares, or a
combination of such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. For purposes of this
Prospectus, the term "Selling Stockholder" includes donees, transferees,
pledgees or other successors in interest of or to the Selling Stockholder, that
receive the Shares as a gift, partnership or limited liability company
distribution or other non-sale related transfer. The Selling Stockholders will
act independently of us in making decisions with respect to the timing, manner
and size of each sale. The methods by which the Shares may be sold or
distributed may include, but are not limited to, the following:
o a cross or block trade in which the broker or dealer engaged by a
Selling Stockholder will attempt to sell the Shares as agent but may
position and resell a portion of the block as principal to facilitate
the transaction;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account;
o an exchange distribution in accordance with the rules of such exchange;
o ordinary brokerage transactions and transactions in which the broker solicits
purchasers; o privately negotiated transactions;
o short sales or borrowings, returns and reborrowings of the Shares pursuant
to stock loan agreements to settle short sales; o delivery in connection
with the issuance of securities by issuers, other than us, that are
exchangeable for (whether on an optional or mandatory basis), or payable in,
such shares (whether such securities are listed on a national securities
exchange or otherwise) or pursuant to which such shares may be distributed;
and
o a combination of any such methods of sale or distribution.
In effecting sales, brokers or dealers engaged by the Selling Stockholders
may arrange for other brokers or dealers to participate in such sales. Brokers
or dealers may receive commissions or discounts from a Selling Stockholder or
from the purchasers in amounts to be negotiated immediately prior to the sale. A
Selling Stockholder may also sell the Shares in accordance with Rule 144 under
the Securities Act or pursuant to other exemptions from registration under the
Securities Act.
If the Shares are sold in an underwritten offering, the Shares may be
acquired by the underwriters for their own account and may be further resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The names of the underwriters with respect to any such
offering and the terms of the transactions, including any underwriting
discounts, concessions or commissions and other items constituting compensation
of the underwriters and broker-dealers, if any, will be set forth in a
Prospectus supplement relating to such offering. Any public offering price and
any discounts, concessions or commissions allowed or reallowed or paid to
broker-dealers may be changed from time to time. Unless otherwise set forth in a
Prospectus supplement, the obligations of the underwriters to purchase the
Shares will be subject to certain conditions precedent and the underwriters will
be obligated to purchase all the Shares specified in such Prospectus supplement
if any such Shares are purchased. This Prospectus also may be used by brokers
who borrow the Shares to settle short sales of shares of our Common Stock and
who wish to offer and sell such Shares under circumstances requiring use of the
Prospectus or making use of the Prospectus desirable.
16
From time to time the Selling Stockholders may engage in short sales, short
sales against the box, puts, calls and other transactions in our securities, or
derivatives thereof, and may sell and deliver the Shares in connection
therewith.
None of the proceeds from the sales of the Shares by the Selling
Stockholders will be received by us. We will bear certain expenses in connection
with the registration of the Shares being offered by the Selling Stockholders,
including all costs incident to the offering and sale of the Shares to the
public other than any commissions and discounts of underwriters, dealers or
agents and any transfer taxes.
The Selling Stockholders, and any broker-dealer who acts in connection with
the sale of Shares hereunder, may be deemed to be an "underwriter" as that term
is defined in the Securities Act and any commissions received by them and profit
on any resale of the Shares as principal might be deemed to be underwriting
discounts and commissions under the Securities Act. We have agreed to indemnify
the Selling Stockholders, any underwriters and certain other participants in an
underwriting or distribution of the Shares and their directors, officers,
employees and agents against certain liabilities, including liabilities arising
under the Securities Act.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
us by G. David Gordon, Esq.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-KSB for the years
ended June 30, 2001 and June 30, 2000, as set forth in their report, which is
incorporated by reference in this Prospectus. Our financial statements are
incorporated by reference in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You can inspect and copy the registration statement of
which this Prospectus is a part, as well as such reports, proxy statements and
other information, at the public reference room maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.
Copies of such material can be obtained from the public reference room of the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. You may obtain information on the operation of the public
reference room by calling the SEC at 1-800-SEC-0330. We are also required to
file electronic versions of these documents with the SEC, which may be accessed
through the SEC's Web site at http://www.sec.gov. You may also inspect reports,
proxy and information statements and other information about us at The American
Stock Exchange at 86 Trinity Place, New York, New York 10006.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this Prospectus, and later information that we file with the SEC
will automatically update and supercede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act until the earlier
of the date the Selling Stockholders sell all the Shares or such other date as
the offering is terminated and any unsold Shares are deregistered by the filing
of a post-effective amendment:
o Our Annual Report on Form 10-KSB for the year ended June 30, 2001;
o Our Quarterly Report on Form 10-QSB for the quarter ended September 30, 2001;
o Our Quarterly Report on Form 10-QSB for the quarter ended December 31,
2001.
o Our Current Reports and Amendments thereto on Form 8-K and Form 8-K/A,
respectively, filed with the SEC:
(i) on July 13, 2001, amending Item 7 of the Current Reports on Form
8-K and 8-K/A filed on April 18, 2001 and May 15, 2001,
respectively, to set forth the audited financial statements of
LST for the year ended December 31, 2000, the unaudited
condensed financial statements of LST as of March 31, 2001, and
the unaudited pro forma condensed consolidated financial
information as of March 31, 2001;
17
(ii) on August 10, 2001, amending Item 7 of the Current Report on
Form 8-K filed on June 29, 2001 to set forth the audited
financial statements of Logisoft Corp., now known as Team Sports
Entertainment, Inc. ("TSE"), for the years ended December 31,
2000 and 1999, the unaudited financial statements of TSE and
subsidiary for the three months ended March 31, 2001 and 2000,
and the unaudited pro forma condensed consolidated financial
statements as of March 31, 2001;
(iii) on August 14, 2001, reporting under Item 5 of such report our
acquisition of certain assets and liabilities of a home technology
company;
(iv) on September 17, 2001, reporting under Item 2 of such report the sale
of our commercial real estate business; and
(v) on October 19, 2001, amending Item 7 of the Current Report on
Form 8-K filed on September 17, 2001 to set forth the unaudited
pro forma financial statements relating to the sale of our
commercial real estate business.
(vi) on February 7, 2002, reporting under Item 4 of such report the change
in our independent auditors.
(vii) on February 22, 2002, Amendment No. 1 of our reporting under Item 4,
origionally filed on February 7, 2000,report the change of our
independent auditors.
o Our Definitive Proxy Statement for our Annual Meeting of Stockholders
held on January 19, 2001, filed with the SEC on January 2, 2001; and
o The description of our Common Stock contained in our Registration
Statement on Form 8-A filed with the SEC on July 19, 1996.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address or telephone number:
eResource Capital Group, Inc.
5935 Carnegie Blvd.
Suite 101
Charlotte, NC 28209
Attention: John Van Heel
Telephone: (704) 553-9330
This Prospectus provides you with a general description of the securities
that may be offered for sale, but does not contain all of the information that
is in the registration statement that we filed with the SEC. Statements
contained herein concerning the provisions of certain documents filed with, or
incorporated by reference in, the registration statement are not necessarily
complete and each such statement is qualified in its entirety by references to
the applicable document filed with the SEC.
You should rely only on the information incorporated by reference or
provided in this Prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The Selling Stockholders will
not make an offer of these Shares in any state where the offer is not permitted.
You should not assume that the information in this Prospectus or any supplement
is accurate as of any date other than the date on the front of the respective
document.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be paid in connection with the offering of the
securities being registered are as follows and will be borne by the Company:
SEC Registration Fee...................................... $ 3,719.12
Legal Fees and Expenses................................... *$ 25,000.00
Accounting and other Miscellaneous Fees and Expenses....... *$ 10,000.00
Total..................................................... $ 38,719.12
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
18
Section 145 of the Delaware General Corporation Law ("DGCL") provides that,
to the extent a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding, whether civil, criminal, administrative or investigative or in
defense of any claim, issue, or matter therein (hereinafter a "Proceeding"), by
reason of the fact that person is or was a director, officer, employee or agent
of a corporation or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise (collectively an "Agent" of the
corporation) that person shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by him in connection
therewith.
The DGCL also provides that a corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened Proceeding
by reason of the fact that person is or was an Agent of the corporation, against
expenses (including attorney's fees), judgment, fines and amounts paid in
settlement actually and reasonably incurred by that person in connection with
such action, suit or proceeding if that person acted in good faith and in a
manner that person reasonably believed to be in, or not opposed to, the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that person's conduct was
unlawful; provided, however, that in an action by or in the right of the
corporation, the corporation may not indemnify such person in respect of any
claim, issue, or matter as to which that person is adjudged to be liable to the
corporation unless, and only to the extent that, the Court of Chancery or the
court in which such proceeding was brought determined that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is reasonably entitled in indemnity.
Article VI of the Company's Restated Certificate of Incorporation limits the
liability of the Company's directors to the fullest extent permitted by the
DGCL. Specifically, no director will be personally liable to the Company or any
stockholder for monetary damages for breach of a fiduciary duty as a director,
except liability for (i) dividends or other distributions of corporate assets,
stock purchases or redemptions that are in contravention of certain statutory
restrictions; (ii) any breach of the duty of loyalty to the Company or its
stockholders; (iii) acts or omissions not in good faith; (iv) acts that involve
intentional misconduct or a knowing violation of law; or (v) any transaction
from which the director derives an improper personal benefit.
Article 5 of the Company's Amended and Restated Bylaws provides that the
Company shall indemnify, to the fullest extent permitted by applicable law, any
Agent who was or is made or is threatened to be made a party to a Proceeding
against all liability and loss suffered and expenses reasonably incurred by such
Agent; provided, however, the Company shall be required to indemnify an Agent in
connection with a Proceeding initiated by such Agent only if the Proceeding was
authorized by the Board of Directors of the Company. The Company's Amended and
Restated Bylaws further provide that the Company shall pay the expenses incurred
in defending any Proceeding in advance of its final disposition; provided,
however, that the payment of expenses incurred by an officer or director in
advance of the final disposition of a Proceeding is made only upon the Company's
receipt of an undertaking by the director or officer to repay all amounts
advanced if it is ultimately determined that such officer or director is not
entitled to be indemnified.
The Company maintains directors' and officers' liability insurance,
including a reimbursement policy in favor of the Company. Additionally, the
Company has entered into separate indemnifications agreements with certain of
its directors and officers which provide, on a contractual basis, for generally
the same rights to indemnification as set forth in the Company's Amended and
Restated Bylaws.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
informed that, in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 16. EXHIBITS.
2.1 -- Stock Purchase Agreement as of August 16, 2000 between the
Registrant, Michael Pruitt, and Darek Childress.
(Incorporated by reference to Exhibit 2.1 to the Registrant's
Current Report on Form 8-K filed on September 22, 2000.)
2.2 -- Stock Purchase Agreement dated as of August 11, 2000 between
the Registrant and Caliente Consulting. (Incorporated herein
reference to Exhibit 2.1 to the Registrant's Current
Report on Form 8-K filed on September 22, 2000.)
2.3 -- Share Exchange Purchase Agreement dated as of November 8,
2000 between the Registrant and Avenel Ventures, Inc.
(Incorporated by reference to Exhibit 2.2 to the Registrant's
Current Report on Form 10-QSB for the quarter ended December
31, 2000 filed on February 14, 2001.)
19
2.4 -- Stock Purchase Agreement between the Registrant and the
majority of the stockholders of LST, Inc. (Incorporated by
reference to the Registrant's Current Report on Form 8-K filed on
April 18, 2001.)
2.5 -- Stock Purchase Agreement dated as of March 16, 2001 between
the Registrant and Glenn Barrett, Jr. (Incorporated by
reference to Exhibit 2.2 to the Registrant's Current Report
on Form 8-K filed on April 18, 2001.)
2.6 -- Stock Purchase Agreement dated as of March 31, 2001 between
the Registrant and Brandon Holdings, Inc. (Incorporated by
reference to Exhibit 2.3 to the Registrant's Current Report
on Form 8-K filed on April 18, 2001.)
2.7 -- Agreement and Plan of Merger dated as of June 5, 2001 between
the Registrant, Logisoft Acquisition Corporation and the
individuals listed on Exhibit A thereto (the "Logisoft Merger
Agreement"). (Incorporated reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K filed on June 13,
2001.)
2.8 -- Joinder to the Logisoft Merger Agreement executed by Logisoft
Computer Products Corp. (Incorporated by reference to
Exhibit 2.2 to the Registrant's Current Report on Form 8-K
filed on June 13, 2001.)
2.9 -- Asset Purchase Agreement dated as of June 20, 2001, by and
among Greater Atlanta Alarm Services, Inc., the Registrant,
Glenda Watson and David Watson. (Incorporated by reference
to Exhibit 2.1 to the Registrant's Current Report on Form 8-K
filed on August 14, 20001.)
4.1 -- Registration Rights Agreement dated January 23, 2001 by and
among the Registrant, Four Corners Capital, LLC and DC
Investment Partners Exchange Fund, Ltd. (Incorporated by
reference to Exhibit 4.1 to the Registrant's Quarterly Report
on Form 10-QSB for the quarter ended December 31, 2000 filed
on February 14, 2001.)
4.2 -- Registration Rights Agreement dated January 23, 2001 between
the Registrant and Acqua Wellington Value Fund, Ltd.
(Incorporated by reference to Exhibit 4.2 to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended
December 31, 2000 filed on February 14, 2001.)
4.3 -- Option Agreement dated January 23, 2001 between the
Registrant and Four Corners Capital, LLC. (Incorporated by
reference to Exhibit 10.4 to the Registrant's Quarterly
Report on Form 10-QSB for the quarter ended December 31, 2000
filed on February 14, 2001.)
20
4.4 -- Warrant dated January 23, 2001 between the Registrant and Four Corners
Capital, LLC. (Incorporated by reference to Exhibit 10.4 to the
Registrant's Quarterly Report on Form 10-QSB for the quarter ended
December 31, 2000 filed on February 14, 2001.)
4.5 -- Warrant dated January 23, 2001 between the Registrant and DC
Investment Partners Exchange Fund Ltd. (Incorporated by
reference to Exhibit 10.4 to the Registrant's Quarterly
Report on Form 10-QSB for the quarter ended December 31, 2000
filed on February 14, 2001.)
4.6 -- Warrant dated January 3, 2000 between the Registrant and
Lazard Freres & Co., LLC, which includes registration
rights. (Incorporated by reference to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended March
31, 2000 filed on May 15, 2000 and amended on October 12,2000.)
4.7 -- Warrant dated June 16, 1999 between the Registrant and
Galland, Kharasch, Greenberg, Fellman and Swirsky, P.C.,
which includes registration rights. (Previously filed.)
4.8 -- Warrant dated April 30, 1999 between the Registrant and Vance
Executive Protection, Inc., which includes registration
rights. (Previously filed.)
4.9 -- Registration Rights Agreement between the Registrant and each
of the stockholders of LST, Inc. (Incorporated by reference
to Exhibit 4.2 to the Registrant's Current Report on Form 8-K
filed on April 18, 2001.)
4.10 -- Letter Agreement dated May 3, 2001 among Lifestyle
Technologies, Inc., the Registrant and David Deutsch, which
includes registration rights.
4.11 -- Warrant dated March 16, 2001 between the Registrant and Noble
International Investments, Inc.
4.12 -- Registration Rights Agreement dated June 26, 2000 between the
Registrant and Worldspan, L.P. (Incorporated by reference to
the Registrant's Annual Report on Form 10-KSB for the year
ended June 30, 2000 filed on September 28, 2000.)
4.13 -- Warrant dated January 23, 2001 between the Registrant and
Acqua Wellington Value Fund, Ltd. (Incorporated by reference
to Exhibit 10.5 to the Registrant's Quarterly Report on Form
10-QSB for the quarter ended December 31, 2000 filed on
February 14, 2001.)
4.14 -- Warrant dated July 2, 1999 between the Registrant and Bert
Lance Grantor Trust.
5.1 -- Legal Opinion with respect to due issuance and Consent of G.
David Gordon, Esq.
23.1 -- Consent of G. David Gordon, Esq. (included in Exhibit 5.1).
23.2 -- Consent of Ernst & Young LLP.
21
99.1 -- General Release and Settlement dated January 23, 2001 by and
among the Registrant, Four Corners Capital, LLC and DC
Investment Partners Exchange Fund Ltd. (Incorporated by
reference to Exhibit 10.4 to the Registrant's Quarterly
Report on Form 10-QSB for the quarter ended December 31, 2000
filed on February 14, 2001.)
99.2 -- General Release and Settlement Agreement dated as of January
23, 2001 between the Registrant and Acqua Wellington Value
Fund, Ltd. (Incorporated by reference to Exhibit 10.5 to the
Registrant's Quarterly Report on Form 10-QSB for the quarter
ended December 31, 2000 filed on February 14, 2001.)
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement:
(i) to include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the Prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of Prospectus filed with the SEC pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change in such information in the registration statement.
Provided, however, that (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference into this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(5) For purposes of determining any liability under the Securities Act, each
filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
22
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted as to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above or
otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in Charlotte, North
Carolina, on this 25 day of February, 2002.
ERESOURCE CAPITAL GROUP, INC.
a Delaware corporation
By: /s/ Michael D. Pruitt
---------------------------------------
Michael D. Pruitt
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act, this Amendment to the
Registration Statement has been signed by the following persons in the
capacities indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Michael D. Pruitt Chairman of the Board, Chief February 25, 2002
-----------------------------
Michael D. Pruitt Executive Officer,
President and Director
/s/ Melinda Morris Zanoni Executive Vice President and February 25, 2002
-----------------------------
Melinda Morris Zanoni Director
/s/ Eric A. Black Director February 25, 2002
-----------------------------
Eric A. Black
/s/ Sylvia A.de Leon Director February 25, 2002
-------------------------------
Sylvia A. de Leon
/s/ Paul B. Johnson Director February 25, 2002
-----------------------------
Paul B. Johnson
/s/ James A. Verbrugge Director February 25, 2002
-----------------------------
Dr. James A. Verbrugge
/s William L. Wortman Vice President, Treasurer and February 25, 2002
-----------------------------
William L. Wortman Chief Financial Officer
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
2.1 -- Stock Purchase Agreement as of August 16, 2000 between the
Registrant, Michael Pruitt, and Darek Childress.
(Incorporated by reference to Exhibit 2.1 to the Registrant's
Current Report on Form 8-K filed on September 22, 2000.)
24
2.2 -- Stock Purchase Agreement dated as of August 11, 2000 between
the Registrant and Caliente Consulting. (Incorporated herein
by reference to Exhibit 2.1 to the Registrant's Current
Report on Form 8-K filed on September 22, 2000.)
2.3 -- Share Exchange Purchase Agreement dated as of November 8,
2000 between the Registrant and Avenel Ventures, Inc.
(Incorporated by reference to Exhibit 2.2 to the Registrant's
Current Report on Form 10-QSB for the quarter ended December
31, 2000 filed on February 14, 2001.)
2.4 -- Stock Purchase Agreement between the Registrant and the
majority of the stockholders of LST, Inc. (Incorporated by
reference to the Registrant's Current Report on Form 8-K
filed on April 18, 2001.)
2.5 -- Stock Purchase Agreement dated as of March 16, 2001 between
the Registrant and Glenn Barrett, Jr. (Incorporated by
reference to Exhibit 2.2 to the Registrant's Current Report
on Form 8-K filed on April 18, 2001.)
2.6 -- Stock Purchase Agreement dated as of March 31, 2001 between
the Registrant and Brandon Holdings, Inc. (Incorporated by
reference to Exhibit 2.3 to the Registrant's Current Report
on Form 8-K filed on April 18, 2001.)
2.7 -- Agreement and Plan of Merger dated as of June 5, 2001 between
the Registrant, Logisoft Acquisition Corporation and the
individuals listed on Exhibit A thereto (the "Logisoft Merger
Agreement"). (Incorporated reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K filed on June 13, 2001.)
2.8 -- Joinder to the Logisoft Merger Agreement executed by Logisoft
Computer Products Corp. (Incorporated by reference to
Exhibit 2.2 to the Registrant's Current Report on Form 8-K
filed on June 13, 2001.)
2.9 -- Asset Purchase Agreement dated as of June 20, 2001, by and
among Greater Atlanta Alarm Services, Inc., the Registrant,
Glenda Watson and David Watson. (Incorporated by reference
to Exhibit 2.1 to the Registrant's Current Report on Form 8-K
filed on August 14, 20001.)
4.1 -- Registration Rights Agreement dated January 23, 2001 by and
among the Registrant, Four Corners Capital, LLC and DC
Investment Partners Exchange Fund, Ltd.. (Incorporated by
reference to Exhibit 4.1 to the Registrant's Quarterly Report
on Form 10-QSB for the quarter ended December 31, 2000 filed
on February 14, 2001.)
4.2 -- Registration Rights Agreement dated January 23, 2001 between
the Registrant and Acqua Wellington Value Fund, Ltd.
(Incorporated by reference to Exhibit 4.2 to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended
December 31, 2000 filed on February 14, 2001.)
25
4.3 -- Option Agreement dated January 23, 2001 between the
Registrant and Four Corners Capital, LLC. (Incorporated by
reference to Exhibit 10.4 to the Registrant's Quarterly
Report on Form 10-QSB for the quarter ended December 31, 2000
filed on February 14, 200.)
4.4 -- Warrant dated January 23, 2001 between the Registrant and
Four Corners Capital, LLC. (Incorporated by reference to
Exhibit 10.4 to the Registrant's Quarterly Report on Form
10-QSB for the quarter ended December 31, 2000 filed on
February 14, 2001.)
4.5 -- Warrant dated January 23, 2001 between the Registrant and DC
Investment Partners Exchange Fund Ltd. (Incorporated by
reference to Exhibit 10.4 to the Registrant's Quarterly
Report for the quarter ended December 31, 2000 filed on
February 14, 2001.)
4.6 -- Warrant dated January 3, 2000 between the Registrant and
Lazard Freres & Co., LLC, which includes registration rights.
(Incorporated by reference to the Registrant's Quarterly
Report on Form 10-QSB for the quarter ended March 31, 2000
filed on May 15, 2000 and amended on October 12, 2000.)
4.7 -- Warrant dated June 16, 1999 between the Registrant and
Galland, Kharasch, Greenberg, Fellman and Swirsky, P.C.,
which includes registration rights. (Previously filed.)
4.8 -- Warrant dated April 30, 1999 between the Registrant and Vance
Executive Protection, Inc., which includes registration
rights. (Previously filed.)
4.9 -- Registration Rights Agreement between the Registrant and each
of the stockholders of LST, Inc. (Incorporated by reference
to Exhibit 4.2 to the Registrant's Current Report on Form 8-K
filed on April 18, 2001.)
4.10 -- Letter Agreement dated May 3, 2001 among Lifestyle
Technologies, Inc., the Registrant and David Deutsch, which
includes registration rights.
4.11 -- Warrant dated March 16, 2001 between the Registrant and Noble
International Investments, Inc.
4.12 -- Registration Rights Agreement dated June 26, 2000 between the
Registrant and Worldspan, L.P. (Incorporated by reference to
the Registrant's Annual Report on Form 10-KSB for the year
ended June 30, 2000 filed on September 28, 2000.)
4.13 -- Warrant dated January 23, 2001 between the Registrant and
Acqua Wellington Value Fund, Ltd. (Incorporated by reference
to Exhibit 10.5 to the Registrant's Quarterly Report on Form
10-QSB for the quarter ended December 31, 2000 filed on
February 14, 2001.)
4.14 -- Warrant dated July 2, 1999 between the Registrant and Bert
Lance Grantor Trust.
5.1 -- Legal Opinion with respect to due issuance and Consent of law
G. David Gordon, Esq.
26
23.1 -- Consent of G. David Gordon, Esq. (included in Exhibit 5.1
filed herewith).
23.2 -- Consent of Ernst & Young LLP.
99.1 -- General Release and Settlement dated January 23, 2001 by and
among the Registrant, Four Corners Capital, LLC and DC
Investment Partners Exchange Fund Ltd.. (Incorporated by
reference to Exhibit 10.4 to the Registrant's Quarterly
Report on Form 10-QSB for the quarter ended December 31, 2000
filed on February 14, 2001.)
99.2 -- General Release and Settlement Agreement dated as of January
23, 2001 between the Registrant and Acqua Wellington Value
Fund, Ltd.. (Incorporated by reference to Exhibit 10.5 to
the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended December 31, 2000 filed on February 14, 2001.)
27